Dear Fellow Employee,

We recently announced the formation of Norfolk Southern's East Carolina Business Unit to run our lines in eastern North Carolina.

Why did we create it? The simple answer is we needed to try something different in an area that had flat revenues, high costs and faced costly reinvestment.

We could have disposed of the 485 miles of track in the East Carolina Business Unit, but retreating from that market would not help us get to our "7 + 7" goal - revenue of $7 billion or better and an operating ratio in the 70s. The right choice was to stand and fight.

In many of our markets, we face similar challenges. Changes in sourcing patterns, production locations and even the overall world economy mean changes for many of the traditional NS markets.

If we are going to get to "7 + 7," we need to fight our way there.

The only way we'll achieve that is to be fully engaged and focused on how best to serve our customers reliably and efficiently. We must think differently about how we conduct our business. We must be innovative and entrepreneurial. We have to look at new ways to reduce costs, and we have to work as a team.

We are operating in a very dynamic business environment. No doubt, you see how our business has changed as you do your job every day. Our commodity mix is different. Our customers' expectations have changed, and we must be able to respond quickly and appropriately to meet those new expectations. To remain competitive, we must use fresh approaches to improve our service to customers, to cut costs and to develop new markets.

This NS team is strong and talented. I know I can depend on you to "stand and fight" as we work our way toward our goals.

David R. Goode
Chairman, President and Chief Executive Officer

New unit promotes rail service
for eastern North Carolina

Norfolk Southern has created a marketing and operating unit in eastern North Carolina to develop new business, improve customer service and increase operating efficiency. The East Carolina Business Unit began operations April 1, with headquarters in Raleigh.

Reflecting the company's renewed focus on eastern North Carolina and its rail customers, the business unit has dedicated local management with complete responsibility for managing 485 miles of NS-operated railroad track east and south of Raleigh. It is designed to bring the railroad closer to its local customers to better meet their needs while improving the use of rail assets.

As an internal unit with its own budget, the East Carolina Business Unit is similar to a short line railroad but is linked to NS' centralized dispatching, customer service and operating systems. It has the flexibility and speed of a small railroad backed by the industrial development and technological resources of a major carrier.

Carl D. Wilson is the unit's general manager, based in Raleigh. Wilson, formerly superintendent of terminals at St. Louis, oversees the new group, including operating and marketing functions.

Ronald L. Taylor, formerly general superintendent of Lambert's Point Docks in Norfolk, is director sales and marketing, also based in Raleigh.

The unit's main terminal for sorting freight cars and building trains is at Raleigh. Satellite terminals are at Chocowinity, Goldsboro, New Bern and Morehead City. Three main rail lines serve more than two dozen communities, including Raleigh, Fayetteville, Mackeys, Lee Creek, Cumnock and Camp Lejeune, and, via the North Carolina Railroad, Cary, Selma and Morehead City. Some 100 NS employees are assigned to the unit's team.

May 12-18 is National Operation Lifesaver Week

President George W. Bush has designated May 12 - 18 National Operation Lifesaver Week. In cooperation with Operation Lifesaver, many activities are taking place around the Norfolk Southern system, said Danny Gilbert, system manager grade crossing safety.

"Every state on our system has events planned. Operation Lifesaver state coordinators have worked with local and state authorities to make everyone more aware of the dangers of trespassing on railroad property and being more alert at highway-rail grade crossings," Gilbert said.

Among the activities, Operation Lifesaver is working with local and NS police to remind motorists to obey traffic signals at highway-rail grade crossings.

Also planned is a mock crash and rescue in Columbia, S.C. NS is working with Operation Lifesaver to provide equipment and crews for the event.

"Being part of an event such as this helps everyone," said Charlie Rickman, superintendent Piedmont Division. "We can demonstrate in a more graphic way how difficult it is to stop a moving train and the consequences of trying to beat the train. That is a great lesson for those not familiar with railroad operations. Every grade crossing crash or trespasser incident we can prevent through these types of demonstrations means that NS employees and people in the communities we serve don't have to go through the tragedy of being involved in one."

NS also is sponsoring two Operation Lifesaver trains on the Northern Region.

"We're running Operation Lifesaver trains from Cleveland to Lorain, Ohio, and from Harrisburg, Pa., to Reading, Pa.," said Rick McIntyre, manager grade crossing safety. "We invite media, local officials and law enforcement professionals to join us for a train crew's view of the route. That helps them understand the extent of the problem and why it's important to enforce grade crossing and trespassing laws."

In Washington, D.C., railroads will sponsor a reception for elected officials.

"All of these activities help us spread the word to 'Look, Listen and Live!' at grade crossings and to 'Stay Off! Stay Away! Stay Alive!' by not trespassing on railroad property. We're proud to be a part of National Operation Lifesaver Week," Gilbert said.

Mixing centers get top marks

Employee dedication and hard work implementing the new Thoroughbred Operating Plan is paying off for Norfolk Southern-served auto mixing centers.

The Chicago and Fostoria facilities recently received service awards.

Chicago was recognized for going the months of December and January without a service failure, and Fostoria was ranked second in the U.S. for rail car time in transit at a rate of 5.1 days. Both awards were presented to the mixing centers from Ford and UPS Autogistics.

In the process, both centers identified possible delays, improving train movement, and arranged shifts around the business to cut dwell time and enhance the overall service NS provides to its customers.

Corey Veal, former terminal superintendent, Chicago, said more effective communication between Calumet Yard and the Chicago mixing center, a revamped yard design and the overall team effort among crews, operators, yardmasters, trainmasters and departments helped improve service at the facility.

NS/BNSF guarantee intermodal service
between California and the Northeast

Norfolk Southern and Burlington Northern and Santa Fe began their first-ever coast-to-coast guaranteed intermodal service between Southern California and the Northeast April 22.

Shippers have the option to purchase - for a premium - seamless, coast-to-coast guaranteed intermodal service for domestic and international container loads of freight moving between San Bernardino, Calif., and Harrisburg, Pa. For each load that does not meet the scheduled availability time for customer pick-up, BNSF and NS will offer a 100-percent refund.

"By adding the guarantee option, we truly believe we have a coast-to-coast transportation product in place that will satisfy our most demanding customers," said Mike McClellan, vice president, NS intermodal marketing. "Moreover, the guaranteed service reliability provides yet another reason for transcontinental over-the-road shippers to consider rail as their preferred mode of transportation."

Charlotte Roadway Shop shows
its pride in ISO 9001:2000

Proof of Norfolk Southern's commitment to quality and customer service can be seen flying high above the Charlotte Roadway Shop in Charlotte, N.C. Celebrating success with a cookout, employees proudly unfurled a banner announcing ISO 9001:2000 registration for the shop. Established by the International Organization for Standardization in Geneva, Switzerland, ISO 9001:2000 is a globally recognized quality standard.

After months of documenting work procedures to reduce the potential for mistakes in work processes, the shop became the first facility on the NS system to be registered to the new ISO 9001:2000 standards.

"ISO 9001 is a customer-driven process. Every one of our customers has an expectation of our service, and we need to meet or exceed that expectation every day or we might lose that customer," said Jeff Yates, assistant vice president quality management. "Not only do our current internal and external customers know our quality standards comply, but we will now be recognized globally for our commitment to improving our customer service and quality management systems."

Employees of the Charlotte Roadway Shop have demonstrated the shop's commitment to continually improve its products and service while working safely and efficiently. The quality manual, quality policy and work procedures developed and implemented during the ISO registration process, provide an excellent foundation on which to build.

"We've already seen an improved response from our customers," said Tom Finley, general shop superintendent. "Since our ISO registration requires continuous improvement of our business management systems, this is only the beginning."

Police, Public Safety Weeks
recognize NS Police commitment

The men and women of the NS police Department come to work every day with a vision - To be the safest, most professional and effective railway police department in the world. Their commitment to that vision is recognized in April and May, when the nation honors the men and women who work in law enforcement.

Since 1991, the second week in April has been designated National Public Safety Telecommunications Week, honoring those individuals who, under pressure, show poise giving 9-1-1 and other emergency assistance within seconds.

"Our NS police communications officers deal with hundreds of calls daily helping our employees and the communities we serve be safer," said Lew Kellison, manager police communication center.

National Police Week, May 13-16, is dedicated to police who have given their lives in the line of duty. The highlight of the week is National Peace Officers Memorial Day, May 15.

Receiving the same training as state law enforcement officers, NS special agents work closely with local, state and federal law enforcement agencies to ensure NS is a safe and efficient railroad on which customers can rely. Nationwide, there are about 2,000 railroad police officers. About 230 work for NS.

NS and its predecessors have lost six officers in the line of duty since 1914.

NS officers will remember their fallen comrades by tying blue ribbons to the antennas on their police cars and affixing a black mourning band to their badge as a sign that those lost are not forgotten.

"The demand on officers in every type of police service in America is greater today than perhaps ever before," said Steve Hanes, NS director of police. "The men and women of the NS police department have proven they can meet the challenge."

NS people on the move

Debbie H. Butler has been named vice president customer service, with headquarters in Atlanta. This new position was created to support Norfolk Southern's customer service improvement initiatives.

Butler will play a key role in helping NS meet the needs of customers. She will oversee the company's National Customer Service Center, centralized yard operations and rail car supply and management.

Terry N. Evans has been named vice president operations planning and budget for Norfolk Southern with headquarters in Norfolk.

In his new position, Evans will be responsible for evaluating operational practices and procedures, with overall responsibility for implementing improvements to achieve NS' financial, operating and customer service goals, including the company's Thoroughbred Operating Plan.

Joseph C. Dimino has been named senior general counsel with responsibility for corporate matters and NS' corporate secretary's office. James A. Squires has been named senior general counsel with responsibility for financial and other business matters. F. Blair Wimbush has been named senior general counsel with responsibility for litigation and operations matters.

V. Wayne Mason has been named general manager Eastern Region with headquarters in Atlanta. He succeeds Terry N. Evans. Mason formerly was superintendent Lake Division, and joined NS in 1999.

Duty. Honor. Country.

NS reservists report from the front

Following are excerpts of letters and e-mail messages received from Norfolk Southern employees called to serve in Operation Enduring Freedom/Noble Eagle.

David Eggers Bridge Foreman, Louisville, Ky.
Sgt. 1st Class, Company E
1149 Infantry Brigade Kentucky Army National Guard
Currently serving in Germany